State Street Global Advisors (SSGA) has expanded its smart beta range with the launch of a global low volatility ETF.
The SPDR STOXX Global Low Volatility UCITS ETF (GLOW) is listed on Euronext Amsterdam and the London Stock Exchange with a total expense ratio (TER) of 0.30%.
Tracking the STOXX Global Low Risk Weighted Diversified 200 index, GLOW will offer investors exposure to the 200 least volatile companies from the STOXX Global 1800 index after incorporating diversification metrics.
Rebalanced quarterly, each company in the index has a maximum weighting of 2% and there is a maximum industry weighting of 25%.
Country weightings greater than 2.5% in the parent index can deviate by +/-5% while countries less than 2.5% are capped at 3x their weight in the parent index.
Matteo Andreetto (pictured), head of SPDR ETF business, EMEA, at SSGA, commented: “Market volatility has become a big challenge for investors, especially during the current pandemic.
“Our family of smart beta low volatility ETFs, which follow simple, rules based methodologies, allow investors to modify their portfolios to better reflect their ongoing return-risk appetite in their strategic allocation.”
“They can build defensiveness into portfolios while maintaining a degree of upside potential, by allocating part of the core allocation into low volatility strategies.”
Combining low volatility and momentum
Ryan Reardon, ETF Strategist, SPDR, at SSGA, added: “While economic data has recovered from the lows experienced earlier this year, the persistent uncertainty in equity prices makes low volatility ETFs increasingly relevant.
“They have the potential to outperform the broader market in uncertain times, providing significant protection to portfolios.”